Cash Credit is short-term funding or loan for a company to meet its working capital requirements. Bank offers loans to an enterprise depending on its credit history and financial stability. Funding procured from cash credit loans can be used for various business purposes, such as business expansion, buying plant and machinery, purchasing raw materials, enhancing stocks, hiring staff, paying-off salaries, undertaking training, debt consolidation, etc. Cash credit has a loan repayment tenure of a maximum of up to 12 months that can be renewed. Features of Cash Credit
Banks and other financial authorities provide a range of financial services, such as factoring, leasing, credit card services, underwriting, portfolio management bill rediscounting, financial advice services, depository services, lease transactions and mutual fund management. Fund based financial services A financial service focused on a fund includes loans that banks provide in the form of loans, overdrafts as well as other money transfers Fund-based credit limits are financial products that a bank or lender will give that allows businesses to physically draw funds out of their accounts. Fund-based working capital includes funding such as:
Businesses typically use fund-based credit limits to gain quicker access to cash to help address things like cash flow problems or even stock. Non fund based financial services A bank does not deal with funds or cash transactions in a non-fund-based financial service. Few examples of this type of service are letters of guarantee, bonds and letters of credit. Non-fund-based finance isn’t physical fundings but more of a promise of financial support compared to actual funds. Non-based-credit limits include:
A bank guarantee is a guarantee from lenders that ensures the debtor will be able to repay the debt. If they can’t settle it, the bank covers it. A letter of credit is a legal document a bank can present that outlines payment will be made back by the business. |
Debt consolidation refers to the act of taking out a new loan to pay off other liabilities and consumer debts. Multiple debts are combined into a single, larger debt, such as a loan, usually with more favorable payoff terms—a lower interest rate, lower monthly payment, or both. Debt consolidation can be used as a tool to deal with student loan debt, credit card debt, and other liabilities.
Benefits
1. Streamlines Finances
2. May Expedite Payoff
3. Could Lower Interest Rate
4. May Reduce Monthly Payment
5. Can Improve Credit Score
Lease Rental Discounting is a tool to acquire loans from banks using rental receipts as collateral. The bank will examine long-term cashflow and provide the loan based on the exact amount. This loan is then payable by the rents promised.
Factors Considered by the Bank When Providing Loan
To check your eligibility for Lease Rental Discounting, the bank will assess several factors which include:
- Value of your property
- Your capacity to repay
- Other assets you own
- Legality and technical aspects of your property
- Liabilities that might occur
Loan against Property / Commercial Property Purchase Loan
Lease Rental Discounting (LRD) loans work on the premise of rental properties being owed a fixed amount of rent. Tenants enter into a lease with the owner of the property. This agreement mandates a regular payment which is known as rent. The property owner can use rental receipts drawn up for the duration of the lease as collateral while applying for a loan.
Loan Against Property is a secured loan product that can be useful for both salaried individuals as well as businesses. The loan gets sanctioned once you mortgage your residential or commercial property. The bank approves the credit amount, which is equivalent to the current value of the property. As a loan buyer, you can mortgage a property that is self-occupied, rented, or any piece of land owned by you. However, you need to make sure that the title of the property is clear.
1. Long repayment tenure: LAP or Loan Against Property has a long repayment tenure that can stretch up to 15 years.
2. Lower interest rates: As compared to other unsecured products like Personal Loans, where the rate of interest is usually high, LAP has lower interest charges.
3. Lower EMIs: The longer the tenure, the lower the EMI. Since the tenure of the Loan Against Property is longer, the EMIs also get reduced. Thus, bringing down the burden of the loan.
4. Easy to avail: You can easily avail of LAP as it is a secured loan type and banks are willing to provide the credit. If you have a property, you can mortgage it with a reputed bank to get
loan for any business or personal needs.
An unsecured business loan is a business loan given without any collateral in exchange. Here, the lender or bank relies on the loan applicant’s creditworthiness and repayment capacity. Sometimes, if the applicant cannot establish their creditworthiness or stability of income, the bank or lender might require personal collateral in exchange for issuing the unsecured business loan. Any company, firm, or individual can take an unsecured business loan for various reasons, that include:
- Upgrading business inventory
- Buying new equipment/ machinery
- Expanding operations to new regions
- Building infrastructure/ business premises
- Boosting working capital requirements
- Purchasing stocks/ assets
Generally, an unsecured business loan is available for micro and small enterprises. However, the bank or lender can even grant loans to companies, businesses, self-employed individuals, and anyone else they deem fit.
A machinery loan is considered a type of business loan that helps entrepreneurs, business owners, and other business entities in acquiring finance to buy machinery/equipment for various business purposes. A loan for machinery purchase helps business entities in gaining more productivity while using new equipment and machinery. Increase in production or output results in higher profits from sales and distribution.
Benefits
- It helps to buy new equipment/machinery and is also term as equipment financing
- Used to refurbish, modify or change existing machinery/equipment
- To repair faulty machines or equipment or to upgrade
- To buy machinery loan for new business
- Flexible loan repayment options with easy EMIs
- Used as working capital loan or equipment finance
- Machinery loan for startup is an additional benefit for new businesses
- Collateral free loan from selected NBFCs, Small Finance banks, etc.
A home/housing loan, also known as a mortgage, is an amount of money borrowed by an individual, usually from banks and companies that lend money. The borrower has to pay back the loan amount with interest in Easy Monthly Instalments or EMI's over a period of time that can vary between 10-30 years depending on the nature of the loan.
There are different kinds of home loan options that are made to suit each unique situation. You can take home loans to buy properties that are either commercial or personal in nature. Here are some of the different kinds of home loans you can take.
1. Home Purchase Loan - You can buy any house or home that is within your budget.
2. Construction Home Loan – You can use this loan to cover the costs of building a house.
3. Land Purchase Loan - You can use this loan to buy a piece of land.
4. Home Improvement Loan – You can use this loan to renovate and improve your house.
5. Home Repair Loan – Pay for the cost of repair and restoration of your home.
6. Home Extension Loan – Increase the amount of built up space at your home using this loan.